G.R. No.

175773               June 17, 2013

MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES UNION (MMPSEU), Petitioner, 

vs.
MITSUBISHI MOTORS PHILIPPINES CORPORATION, Respondent.

The Collective Bargaining Agreement (CBA) of the parties in this case provides that the company shoulder the hospitalization
expenses of the dependents of covered employees subject to certain limitations and restrictions. Accordingly, covered employees
pay part of the hospitalization insurance premium through monthly salary deduction while the company, upon hospitalization of
the covered employees' dependents, shall pay the hospitalization expenses incurred for the same. The conflict arose when a
portion of the hospitalization expenses of the covered employees' dependents were paid/shouldered by the dependent's own health
insurance. While the company refused to pay the portion of the hospital expenses already shouldered by the dependents' own
health insurance, the union insists that the covered employees are entitled to the whole and undiminished amount of said hospital
expenses.

By this Petition for Review on Certiorari, 1 petitioner Mitsubishi Motors Philippines Salaried Employees Union (MMPSEU)
assails the March 31, 2006 Decision2 and December 5, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 75630,
which reversed and set aside the Voluntary Arbitrator’s December 3, 2002 Decision 4 and declared respondent Mitsubishi Motors
Philippines Corporation (MMPC) to be under no legal obligation to pay its covered employees’ dependents’ hospitalization
expenses which were already shouldered by other health insurance companies.

Factual Antecedents

The parties’ CBA5 covering the period August 1, 1996 to July 31, 1999 provides for the hospitalization insurance benefits for the
covered dependents, thus:

SECTION 4. DEPENDENTS’ GROUP HOSPITALIZATION INSURANCE – The COMPANY shall obtain group
hospitalization insurance coverage or assume under a self-insurance basis hospitalization for the dependents of regular employees
up to a maximum amount of forty thousand pesos (₱40,000.00) per confinement subject to the following:

a. The room and board must not exceed three hundred pesos (₱300.00) per day up to a maximum of thirty-one (31) days.
Similarly, Doctor’s Call fees must not exceed three hundred pesos (₱300.00) per day for a maximum of thirty-one (31)
days. Any excess of this amount shall be borne by the employee.

b. Confinement must be in a hospital designated by the COMPANY. For this purpose, the COMPANY shall designate
hospitals in different convenient places to be availed of by the dependents of employees. In cases of emergency where
the dependent is confined without the recommendation of the company doctor or in a hospital not designated by the
COMPANY, the COMPANY shall look into the circumstances of such confinement and arrange for the payment of the
amount to the extent of the hospitalization benefit.

c. The limitations and restrictions listed in Annex "B" must be observed.

d. Payment shall be direct to the hospital and doctor and must be covered by actual billings.

Each employee shall pay one hundred pesos (₱100.00) per month through salary deduction as his share in the payment of the
insurance premium for the above coverage with the balance of the premium to be paid by the COMPANY. If the COMPANY is
self-insured the one hundred pesos (₱100.00) per employee monthly contribution shall be given to the COMPANY which shall
shoulder the expenses subject to the above level of benefits and subject to the same limitations and restrictions provided for in
Annex "B" hereof.

The hospitalization expenses must be covered by actual hospital and doctor’s bills and any amount in excess of the above
mentioned level of benefits will be for the account of the employee.

For purposes of this provision, eligible dependents are the covered employees’ natural parents, legal spouse and legitimate or
legally adopted or step children who are unmarried, unemployed who have not attained twenty-one (21) years of age and wholly
dependent upon the employee for support.

This provision applies only in cases of actual confinement in the hospital for at least six (6) hours.

Maternity cases are not covered by this section but will be under the next succeeding section on maternity benefits.6
When the CBA expired on July 31, 1999, the parties executed another CBA7 effective August 1, 1999 to July 31, 2002
incorporating the same provisions on dependents’ hospitalization insurance benefits but in the increased amount of ₱50,000.00.
The room and board expenses, as well as the doctor’s call fees, were also increased to ₱375.00.

On separate occasions, three members of MMPSEU, namely, Ernesto Calida (Calida), Hermie Juan Oabel (Oabel) and Jocelyn
Martin (Martin), filed claims for reimbursement of hospitalization expenses of their dependents.

MMPC paid only a portion of their hospitalization insurance claims, not the full amount. In the case of Calida, his wife, Lanie,
was confined at Sto. Tomas University Hospital from September 4 to 9, 1998 due to Thyroidectomy. The medical expenses
incurred totalled ₱29,967.10. Of this amount, ₱9,000.00 representing professional fees was paid by MEDICard Philippines, Inc.
(MEDICard) which provides health maintenance to Lanie.8 MMPC only paid ₱12,148.63.9 It did not pay the ₱9,000.00 already
paid by MEDICard and the ₱6,278.47 not covered by official receipts. It refused to give to Calida the difference between the
amount of medical expenses of ₱27,427.1010 which he claimed to be entitled to under the CBA and the ₱12,148.63 which MMPC
directly paid to the hospital.

In the case of Martin, his father, Jose, was admitted at The Medical City from March 26 to 27, 2000 due to Acid Peptic Disease
and incurred medical expenses amounting to ₱9,101.30.14 MEDICard paid ₱8,496.00.15Consequently, MMPC only paid
₱288.40,16 after deducting from the total medical expenses the amount paid by MEDICard and the ₱316.90 discount given by the
hospital.

Claiming that under the CBA, they are entitled to hospital benefits amounting to ₱27,427.10, ₱6,769.35 and ₱8,123.80,
respectively, which should not be reduced by the amounts paid by MEDICard and by Prosper, Calida, Oabel and Martin asked for
reimbursement from MMPC. However, MMPC denied the claims contending that double insurance would result if the said
employees would receive from the company the full amount of hospitalization expenses despite having already received payment
of portions thereof from other health insurance providers.

This prompted the MMPSEU President to write the MMPC President 17 demanding full payment of the hospitalization benefits.
Alleging discrimination against MMPSEU union members, she pointed out that full reimbursement was given in a similar claim
filed by Luisito Cruz (Cruz), a member of the Hourly Union. In a letter-reply, 18 MMPC, through its Vice-President for Industrial
Relations Division, clarified that the claims of the said MMPSEU members have already been paid on the basis of official receipts
submitted. It also denied the charge of discrimination and explained that the case of Cruz involved an entirely different matter
since it concerned the admissibility of certified true copies of documents for reimbursement purposes, which case had been settled
through voluntary arbitration.

On August 28, 2000, MMPSEU referred the dispute to the National Conciliation and Mediation Board and requested for
preventive mediation.19

Proceedings before the Voluntary Arbitrator

On October 3, 2000, the case was referred to Voluntary Arbitrator Rolando Capocyan for resolution of the issue involving the
interpretation of the subject CBA provision.20

MMPSEU alleged that there is nothing in the CBA which prohibits an employee from obtaining other insurance or declares that
medical expenses can be reimbursed only upon presentation of original official receipts. It stressed that the hospitalization benefits
should be computed based on the formula indicated in the CBA without deducting the benefits derived from other insurance
providers. Besides, if reduction is permitted, MMPC would be unjustly benefited from the monthly premium contributed
by the employees through salary deduction. MMPSEU added that its members had legitimate claims under the CBA and that
any doubt as to any of its provisions should be resolved in favor of its members. Moreover, any ambiguity should be resolved in
favor of labor.21

On the other hand, MMPC argued that the reimbursement of the entire amounts being claimed by the covered employees,
including those already paid by other insurance companies, would constitute double indemnity or double insurance, which is
circumscribed under the Insurance Code. Moreover, a contract of insurance is a contract of indemnity and the employees cannot
be allowed to profit from their dependents’ loss.22

Meanwhile, the parties separately sought for a legal opinion from the Insurance Commission relative to the issue at hand. In its
letter23 to the Insurance Commission, MMPC requested for confirmation of its position that the covered employees cannot claim
insurance benefits for a loss that had already been covered or paid by another insurance company. However, the Office of the
Insurance Commission opted not to render an opinion on the matter as the same may become the subject of a formal complaint
before it.24 On the other hand, when queried by MMPSEU, 25 the Insurance Commission, through Atty. Richard David C. Funk II
(Atty. Funk) of the Claims Adjudication Division, rendered an opinion contained in a letter,26 viz:

Ms. Cecilia L. Paras

President

Mitsubishi Motors Phils.

[Salaried] Employees Union Ortigas Avenue Extension, Cainta, Rizal

Madam:

We acknowledge receipt of your letter which, to our impression, basically poses the question of whether or not recovery of
medical expenses from a Health Maintenance Organization bars recovery of the same reimbursable amount of medical expenses
under a contract of health or medical insurance.

We wish to opine that in cases of claims for reimbursement of medical expenses where there are two contracts providing benefits
to that effect, recovery may be had on both simultaneously. In the absence of an Other Insurance provision in these coverages, the
courts have uniformly held that an insured is entitled to receive the insurance benefits without regard to the amount of total
benefits provided by other insurance. (INSURANCE LAW, A Guide to Fundamental Principles, Legal Doctrines, and
Commercial Practices; Robert E. Keeton, Alau I. Widiss, p. 261). The result is consistent with the public policy underlying the
collateral source rule – that is, x xx the courts have usually concluded that the liability of a health or accident insurer is not
reduced by other possible sources of indemnification or compensation. (ibid).

Very truly yours,

RICHARD DAVID C. FUNK II

Officer-in-Charge
Claims Adjudication Division

(SGD.)
Attorney IV

On December 3, 2002, the Voluntary Arbitrator rendered a Decision 27 finding MMPC liable to pay or reimburse the amount of
hospitalization expenses already paid by other health insurance companies. The Voluntary Arbitrator held that the employees may
demand simultaneous payment from both the CBA and their dependents’ separate health insurance without resulting to double
insurance, since separate premiums were paid for each contract. He also noted that the CBA does not prohibit reimbursement in
case there are other health insurers.

Proceedings before the Court of Appeals

MMPC filed a Petition for Review with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction28 before the CA. It claimed that the Voluntary Arbitrator committed grave abuse of discretion in not finding that
recovery under both insurance policies constitutes double insurance as both had the same subject matter, interest insured and risk
or peril insured against; in relying solely on the unauthorized legal opinion of Atty. Funk; and in not finding that the employees
will be benefited twice for the same loss. In its Comment, 29 MMPSEU countered that MMPC will unjustly enrich itself and profit
from the monthly premiums paid if full reimbursement is not made.

On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite the lack of a provision which bars recovery in
case of payment by other insurers, the wordings of the subject provision of the CBA showed that the parties intended to make
MMPC liable only for expenses actually incurred by an employee’s qualified dependent. In particular, the provision stipulates that
payment should be made directly to the hospital and that the claim should be supported by actual hospital and doctor’s bills. These
mean that the employees shall only be paid amounts not covered by other health insurance and is more in keeping with the
principle of indemnity in insurance contracts. Besides, a contrary interpretation would "allow unscrupulous employees to unduly
profit from the x xx benefits" and shall "open the floodgates to questionable claims x x x."30

The dispositive portion of the CA Decision31 reads:

WHEREFORE, the instant petition is GRANTED. The decision of the voluntary arbitrator dated December 3, 2002 is
REVERSED and SET ASIDE and judgment is rendered declaring that under Art. XI, Sec. 4 of the Collective Bargaining
Agreement between petitioner and respondent effective August 1, 1999 to July 31, 2002, the former’s obligation to reimburse the
Union members for the hospitalization expenses incurred by their dependents is exclusive of those paid by the Union members to
the hospital.

SO ORDERED.32
In its Motion for Reconsideration,33 MMPSEU pointed out that the alleged oppression that may be committed by abusive
employees is a mere possibility whereas the resulting losses to the employees are real. MMPSEU cited Samsel v. Allstate
Insurance Co.,34 wherein the Arizona Supreme Court explicitly ruled that an insured may recover from separate health insurance
providers, regardless of whether one of them has already paid the medical expenses incurred. On the other hand, MMPC argued in
its Comment35 that the cited foreign case involves a different set of facts.

The CA, in its Resolution36 dated December 5, 2006, denied MMPSEU’s motion.

Hence, this Petition.

Issues

MMPSEU presented the following grounds in support of its Petition:

A.

THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVERSED THE DECISION DATED 03 [DECEMBER] 2002
OF THE VOLUNTARY ARBITRATOR BELOW WHEN THE SAME WAS SUPPORTED BY SUBSTANTIAL EVIDENCE,
INCLUDING THE OPINION OF THE INSURANCE COMMISSION THAT RECOVERY FROM BOTH THE CBA AND
SEPARATE HEALTH CARDS IS NOT PROHIBITED IN THE ABSENCE OF ANY SPECIFIC PROVISION IN THE CBA.

B.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN OVERTURNING THE DECISION OF THE
VOLUNTARY ARBITRATOR WITHOUT EVEN GIVING ANY LEGAL OR JUSTIFIABLE BASIS FOR SUCH REVERSAL.

C.

THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING TO CONSIDER OR EVEN MENTION
ANYTHING ABOUT THE AMERICAN AUTHORITIES CITED IN THE RECORDS THAT DO NOT PROHIBIT, BUT IN
FACT ALLOW, RECOVERY FROM TWO SEPARATE HEALTH PLANS.

D.

THE COURT OF APPEALS GRAVELY ERRED IN GIVING MORE IMPORTANCE TO A POSSIBLE, HENCE MERELY
SPECULATIVE, ABUSE BY EMPLOYEES OF THE BENEFITS IF DOUBLE RECOVERY WERE ALLOWED INSTEAD
OF THE REAL INJURY TO THE EMPLOYEES WHO ARE PAYING FOR THE CBA HOSPITALIZATION BENEFITS
THROUGH MONTHLY SALARY DEDUCTIONS BUT WHO MAY NOT BE ABLE TO AVAIL OF THE SAME IF THEY
OR THEIR DEPENDENTS HAVE OTHER HEALTH INSURANCE.37

MMPSEU avers that the Decision of the Voluntary Arbitrator deserves utmost respect and finality because it is supported by
substantial evidence and is in accordance with the opinion rendered by the Insurance Commission, an agency equipped with vast
knowledge concerning insurance contracts. It maintains that under the CBA, member-employees are entitled to full
reimbursement of medical expenses incurred by their dependents regardless of any amounts paid by the latter’s health insurance
provider. Otherwise, non-recovery will constitute unjust enrichment on the part of MMPC. It avers that recovery from both the
CBA and other insurance companies is allowed under their CBA and not prohibited by law nor by jurisprudence.

Our Ruling

The Petition has no merit.

Atty. Funk erred in applying the collateral source rule.

The Voluntary Arbitrator based his ruling on the opinion of Atty. Funk that the employees may recover benefits from different
insurance providers without regard to the amount of benefits paid by each. According to him, this view is consistent with the
theory of the collateral source rule.

As part of American personal injury law, the collateral source rule was originally applied to tort cases wherein the defendant is
prevented from benefiting from the plaintiff’s receipt of money from other sources. 38 Under this rule, if an injured person receives
compensation for his injuries from a source wholly independent of the tortfeasor, the payment should not be deducted from the
damages which he would otherwise collect from the tortfeasor.39 In a recent Decision40 by the Illinois Supreme Court, the rule has
been described as "an established exception to the general rule that damages in negligence actions must be compensatory." The
Court went on to explain that although the rule appears to allow a double recovery, the collateral source will have a lien or
subrogation right to prevent such a double recovery.41 In Mitchell v. Haldar,42 the collateral source rule was rationalized by the
Supreme Court of Delaware:

The collateral source rule is ‘predicated on the theory that a tortfeasor has no interest in, and therefore no right to benefit from
monies received by the injured person from sources unconnected with the defendant’. According to the collateral source rule, ‘a
tortfeasor has no right to any mitigation of damages because of payments or compensation received by the injured person from an
independent source.’ The rationale for the collateral source rule is based upon the quasi-punitive nature of tort law liability. It has
been explained as follows:

The collateral source rule is designed to strike a balance between two competing principles of tort law: (1) a plaintiff is entitled to
compensation sufficient to make him whole, but no more; and (2) a defendant is liable for all damages that proximately result
from his wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a defendant who escapes, in whole
or in part, liability for his wrong enjoys a windfall. Because the law must sanction one windfall and deny the other, it favors the
victim of the wrong rather than the wrongdoer.

Thus, the tortfeasor is required to bear the cost for the full value of his or her negligent conduct even if it results in a windfall for
the innocent plaintiff. (Citations omitted)

As seen, the collateral source rule applies in order to place the responsibility for losses on the party causing them.43 Its application
is justified so that "'the wrongdoer should not benefit from the expenditures made by the injured party or take advantage of
contracts or other relations that may exist between the injured party and third persons." 44 Thus, it finds no application to cases
involving no-fault insurances under which the insured is indemnified for losses by insurance companies, regardless of who was at
fault in the incident generating the losses.45 Here, it is clear that MMPC is a no-fault insurer. Hence, it cannot be obliged to pay the
hospitalization expenses of the dependents of its employees which had already been paid by separate health insurance providers of
said dependents.

The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s view that the covered employees are entitled to full payment of
the hospital expenses incurred by their dependents, including the amounts already paid by other health insurance companies based
on the theory of collateral source rule.

The conditions set forth in the CBA provision indicate an intention to limit MMPC’s liability only to actual expenses incurred by
the employees’ dependents, that is, excluding the amounts paid by dependents’ other health insurance providers.

The Voluntary Arbitrator ruled that the CBA has no express provision barring claims for hospitalization expenses already paid by
other insurers. Hence, the covered employees can recover from both. The CA did not agree, saying that the conditions set forth in
the CBA implied an intention of the parties to limit MMPC’s liability only to the extent of the expenses actually incurred by their
dependents which excludes the amounts shouldered by other health insurance companies.

We agree with the CA. The condition that payment should be direct to the hospital and doctor implies that MMPC is only liable to
pay medical expenses actually shouldered by the employees’ dependents. It follows that MMPC’s liability is limited, that is, it
does not include the amounts paid by other health insurance providers. This condition is obviously intended to thwart not only
fraudulent claims but also double claims for the same loss of the dependents of covered employees.

It is well to note at this point that the CBA constitutes a contract between the parties and as such, it should be strictly construed for
the purpose of limiting the amount of the employer’s liability. 46 The terms of the subject provision are clear and provide no room
for any other interpretation. As there is no ambiguity, the terms must be taken in their plain, ordinary and popular
sense.47 Consequently, MMPSEU cannot rely on the rule that a contract of insurance is to be liberally construed in favor of the
insured. Neither can it rely on the theory that any doubt must be resolved in favor of labor.

Samsel v. Allstate Insurance Co. is not on all fours with the case at bar.

MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where the Supreme Court of Arizona allowed the insured to enjoy
medical benefits under an automobile policy insurance despite being able to also recover from a separate health insurer. In that
case, the Allstate automobile policy does not contain any clause restricting medical payment coverage to expenses actually paid
by the insured nor does it specifically provide for reduction of medical payments benefits by a coordination of
benefits.48 However, in the case before us, the dependents’ group hospitalization insurance provision in the CBA specifically
contains a condition which limits MMPC’s liability only up to the extent of the expenses that should be paid by the covered
employee’s dependent to the hospital and doctor. This is evident from the portion which states that "payment by MMPC shall be
direct to the hospital and doctor."49 In contrast, the Allstate automobile policy expressly gives Allstate the authority to pay directly
to the insured person or on the latter’s behalf all reasonable expenses actually incurred. Therefore, reliance on Samsel is
unavailing because the facts therein are different and not decisive of the issues in the present case.
To allow reimbursement of amounts paid under other insurance policies shall constitute double recovery which is not
sanctioned by law.

MMPSEU insists that MMPC is also liable for the amounts covered under other insurance policies; otherwise, MMPC will
unjustly profit from the premiums the employees contribute through monthly salary deductions.

This contention is unmeritorious.

To constitute unjust enrichment, it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean
illegally or unlawfully.50 A claim for unjust enrichment fails when the person who will benefit has a valid claim to such benefit.51

The CBA has provided for MMPC’s limited liability which extends only up to the amount to be paid to the hospital and doctor by
the employees’ dependents, excluding those paid by other insurers. Consequently, the covered employees will not receive more
than what is due them; neither is MMPC under any obligation to give more than what is due under the CBA.

Moreover, since the subject CBA provision is an insurance contract, the rights and obligations of the parties must be determined in
accordance with the general principles of insurance law.52 Being in the nature of a non-life insurance contract and essentially a
contract of indemnity, the CBA provision obligates MMPC to indemnify the covered employees’ medical expenses incurred by
their dependents but only up to the extent of the expenses actually incurred.53 This is consistent with the principle of indemnity
which proscribes the insured from recovering greater than the loss.54 Indeed, to profit from a loss will lead to unjust enrichment
and therefore should not be countenanced. As aptly ruled by the CA, to grant the claims of MMPSEU will permit possible abuse
by employees.

WHEREFORE, the Petition is DENIED. The Decision dated March 31, 2006 and Resolution dated December 5, 2006 of the
Court of Appeals in CA-G.R. SP No. 75630, are AFFIRMED.

SO ORDERED.